Time-barring to be challenged

THE legality of time-bars on mortgage endowment complaints is set to be challenged as the door closes on hundreds of thousands of mis-selling victims.

A group of firms have announced they will be mounting a challenge against endowment complaint time-barring.

Currently if policy holders do not complain within 3 years of their initial shortfall warning they can become time-barred from pursuing their misselling claim.

So far it is thought that 1m endowment policy holders have already been time-barred.

The challenge is expected to centre on how time-bar letters were served to customers, which is regulated by Financial Services Authority under the Financial Services and Markets Act.

*The FSMA states that warning notices can be 'deemed to be served', which means the recipient doesn't have to physically accept the letter for it to be served.

We will keep you up to date on how this action progresses.

Jul 28, 2005
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Lloyds TSB plc has allocated a further £110 million to compensate endowment policyholders. This is in addition to the £250 million which was set aside to pay compensation in 2003.

Lloyds TSB plc to impose a time bar on endowment policyholders that were mis-sold their policies in order to prevent them from making a claim

Reported in the Daily Telegraph December 2004

Mortgage endowment policyholders are collectively going to face a shortfall estimated at £ 40 billion

The average amount of compensation where a policy has been mis-sold is estimated to be £3,000
Source ABI (The Association of British Insurers) 2006